Israel's energy minister on Sunday criticised a landmark nuclear accord between the Jewish state's arch-foe Iran and world powers but said Tehran had so far respected the deal.

The agreement, which was signed in July 2015 and came into force in January, saw Tehran accept curbs to its nuclear programme in exchange for a lifting of economic sanctions by world powers.

"It's a bad deal but it's an accomplished fact and during the first year we spotted no significant breach from the Iranians," said Youval Steinitz, who is close to Prime Minister Benjamin Netanyahu.

"But it's still too early to conclude that this 12-year deal is a success," he told public radio.

Steinitz's comments came after US President Barack Obama on Thursday defended the accord.

Israel's defence ministry, led by hardliner Avigdor Lieberman, on Friday compared the deal with Iran to the 1938 Munich Agreement, which allowed Nazi Germany to annex parts of then Czechoslovakia.

Netanyahu the same day repeated his country's rejection of the Iran deal but stressed that Israel and the United States remained great allies.

For several months the US and Israeli governments have been negotiating the terms of a new 10-year defence aid pact to replace the current one, which expires in 2018 and is worth more than $3 billion (2.7 billion euros) per year.

The Netanyahu government wants the United States to increase the annual amount of military assistance it provides.

Israel defence ministry likens Iran deal to Munich accord
Jerusalem (AFP) Aug 5, 2016 - Israel's defence ministry on Friday likened the Iran nuclear deal to the 1938 Munich agreement with Nazi Germany and slammed US President Barack Obama for defending the accord with Tehran.

The rebuke came after Obama on Thursday defended the nuclear deal which was sealed in July 2015 between Tehran and six world powers led by Washington.

Obama told reporters that the year-old nuclear deal "has worked exactly the way we said it was going to work".

"You'll recall that there were all these horror stories about how Iran was going to cheat and this wasn't going to work and that Iran was going to.... finance terrorism and all these kinds of scenarios, and none of them have come to pass," said Obama.

"It's not just the assessment of our intelligence community, it's the assessment of the Israeli military and the intelligence community, the country that was most opposed to this deal that acknowledges this has been a game changer and that Iran has abided by the deal and that they no longer have the sort of short-term breakout capacity that would allow them to develop nuclear weapons," he added.

Israel's defence ministry, lead by hardliner Avigdor Lieberman, on Friday compared the deal with Iran to the Munich agreement, which allowed Nazi Germany to annex parts of then Czechoslovakia.

"The Munich agreement did not prevent World War II and the Shoah (Holocaust) because it rested on the hypothesis that Nazi Germany could be a partner to an agreement," it said in a statement.

The defence ministry said the Iran deal was "harmful" and would also fail to stop Iran from developing nuclear weapons.

Tehran "clearly and proudly proclaims that its goal is the destruction of the State of Israel," the ministry said.

It said the Jewish state's defence establishment and the entire Israeli people "understand that such agreements are not useful and undermine the fight without concession against terrorist states like Iran".

Prime Minister Benjamin Netanyahu released a separate statement, repeating the country's rejection of the Iran deal but stopping short of lambasting Obama.

"While Israel's view on the Iran deal remains unchanged... it firmly believes that Israel has no greater ally than the United States," said the statement released by the premier's office.

"Prime Minister Netanyahu looks forward to further strengthening the alliance between Israel and the United States with President Obama and with the next US administration," it added.

The deal with Iran, which came into force in January, saw Tehran accept curbs to its nuclear programme in exchange for a lifting of sanctions by world powers.